Custom Furniture Manufactures a Small Table and a Large Table

question 108

Multiple Choice

Custom Furniture manufactures a small table and a large table. The small table sells for $800, has variable costs of $520 per table, and takes eight direct labor hours to manufacture. The large table sells for $1,200, has variable costs of $720, and takes sixteen direct labor hours to manufacture. The company has a maximum of 4,800 direct labor hours per month when operating at full capacity. If there are no constraints on sales of either product, and the company could choose any proportions of product mix that they wanted, what is the optimum product mix to maximize operating income?

• A) 900 units of small, 100 units of large
• B) Zero units of small, 300 units of large
• C) 300 units of small, 200 units of large
• D) 600 units of small, zero units of large

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